Legal battle keeps Teavana open in Sioux Falls -- for now

Simon Property Group is suing Starbucks to keep the beverage behemoth from closing its Teavana stores operating in Simon malls nationwide, before their leases run out.

Dwight Adams/IndyStar

Teavana at the Empire Mall will remain open for now, in spite of plans by its parent company to close by next spring.

Loose-leaf tea lovers can thank an ongoing legal battle between Starbucks and the Indianapolis-based company that operates the Sioux Falls mall.

Shoppers walk in front of Teavana when it opened in 2013.

Emily Spartz / Argus Leader, Emily Spartz / Argus Leader

An Indiana judge agreed last week to temporarily keep Teavana locations open during a lawsuit filed by Simon Property Group, which took the coffee giant to court for plans to close Teavana stores in shopping centers across the United States.

Starbucks acquired Teavana in 2012, claiming the move would “jumpstart the next wave of growth” in the tea industry.

The stores have consistently underperformed, Starbucks executives said earlier this year in a financial earnings report. The Seattle-based chain announced in July it would close all 379 Teavana stores and offer jobs at nearby Starbucks locations to the 3,300 employees who would be affected.

Simon sued Starbucks a month later, claiming the coffee chain would violate leases for 76 stores at Simon malls, which extend as far out as 2027. Unlike other retail chains that have closed mall locations in the last two years, Starbucks is “thriving,” according to a civil complaint filed by Simon.

Simon listed a number of retailers who closed to avoid bankruptcy or financial ruin, including rue21, Kenneth Cole, Nine West and Bebe.

The judge granted Simon’s motion for a preliminary injunction, saying the closures could hurt the ability of the company to enforce lease agreements with other companies.

“Starbucks should not be permitted to put its stock price above its contractual obligations, the viability of Simon and its shopping center, other retailers and consumers who count on the Teavana stores in Simon’s Shopping Centers, and the communities served by those shopping centers,” Simon said in the complaint.